1 is better, but you don't have to use the official radio spelling alphabet. You can just say any word that helps, “A for apple” etc. Just don’t say “P for psycho” or something else unhelpful like that.
Also, if your pronunciation is clear and there is no possible confusion, you don’t have to use a word. You can just say, “Smith Street, S – M – I – T – H”. But maybe you already knew that.
ETA: If I have already spelt a word and I then realise there is possible confusion, I might say, “Oh, that’s M as in Mary”
Student or Learner